Perpetual, Physical, and Annual Inventory—Separate Responsibilities

Good internal controls include having at least four people responsible for gambling inventory records: 

• one person to do the ongoing perpetual inventory; 
• a different person to take the monthly physical inventory; and 
• two or more different people to conduct the annual certified inventory and cash count. 

Involving at least four people allows for good accounting checks and balances in the gambling operation and helps protect an organization from theft.

Perpetual inventory—One person maintains the perpetual inventory, an ongoing record of games received by the organization as a whole per the distributor invoices and games closed.

• This person may not do the physical inventory or the annual certified inventory and cash count required by the Department of Revenue.

Physical inventory—A different person conducts a physical inventory at the end of each month to verify the accuracy of the perpetual inventory record. This means the person actually goes to each premises where games are stored or in play, records the inventory including games in play, and signs and dates, in ink, the physical inventory records.

• This person may not be the individual who maintains the inventory on a daily basis. For example, a paper pull-tab seller or a person who does the perpetual inventory may not be involved in doing the physical inventory.
• This person may not conduct the annual certified inventory and cash count required by the Department of Revenue.

Comparison of perpetual and physical inventory—A person compares the accuracy of the perpetual and physical inventories to ensure that no inventory is missing.

Annual Certified Inventory—This is required by the Department of Revenue for all licensed organizations at the end of the organization’s fiscal year.